Drug prices likely to increase as Centre considers minimum import prices, says report

The government had launched a production-linked incentive (PLI) scheme in 2020 to encourage domestic players to invest in manufacturing key inputs and reduce this dependency

Several pharmaceutical industry experts have voiced concerns over the government's plan to introduce minimum import prices (MIP) for certain essential drug ingredients, warning that such a move could inflate production costs for both active pharmaceutical ingredients (APIs) and finished formulations in India, The Economic Times reported.

They cautioned that these higher input costs would ultimately push up medicine prices for patients.

Government officials told ET that the proposal aims to curb heavy reliance on imported raw materials-primarily from China-which they believe threatens the viability of domestic manufacturers.

The Centre is examining whether to set minimum import prices for Penicillin-G, 6APA and amoxicillin. Industry executives told ET that imposing an MIP on these core components of antibiotic formulations could deal a severe blow to micro, small and medium enterprises (MSMEs) in the pharmaceutical sector.

One executive, speaking anonymously to The Economic Times, said more than 10,000 MSMEs could be "severely impacted, most likely shut down," potentially resulting in job losses of around 200,000. The government had earlier fixed an MIP of $111 per kg for ATS-8 through September 30, 2026, and in October set an MIP of Rs 1,174 per kg for sulphadiazine, effective until September 30 next year.

Some experts cited by ET view the government's approach as a strong push toward self-reliance, especially as India continues to depend heavily on China for critical pharma raw materials.

The government had launched a production-linked incentive (PLI) scheme in 2020 to encourage domestic players to invest in manufacturing key inputs and reduce this dependency.

However, industry insiders told The Economic Times that the PLI scheme was never intended to influence the pricing of materials such as 6APA or amoxicillin.

They cautioned that the use of MIPs could create the perception that PLI beneficiaries are seeking extra protection that goes beyond what the programme allows.

Another executive warned that including amoxicillin under the MIP mechanism could raise medicine prices supplied through government procurement channels by as much as 40%, ET reported.